Between a rock and a hard place : pressures reducing NGO managers' ability to analyze the effects of their organizations' financial transactions

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BETWEEN A ROCK AND A HARD PLACE:

Pressures reducing NGO managers' ability to analyze the effects of their organizations' financial transactions

Geir Øye

DepartmentofNORAGRICMasterThesis30credits2013

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The Department of International Environment and Development Studies, Noragric, is the international gateway for the Norwegian University of Life Sciences (UMB). Eight departments, associated

research institutions and the Norwegian College of Veterinary Medicine in Oslo. Established in 1986, Noragric’s contribution to international development lies in the interface between research, education (Bachelor, Master and PhD programmes) and assignments.

The Noragric Master theses are the final theses submitted by students in order to fulfil the requirements under the Noragric Master programme “International Environmental Studies”,

“Development Studies” and other Master programmes.

The findings in this thesis do not necessarily reflect the views of Noragric. Extracts from this

publication may only be reproduced after prior consultation with the author and on condition that the source is indicated. For rights of reproduction or translation contact Noragric.

geir2000sarajevo@hotmail.com

Noragric

Department of International Environment and Development Studies P.O. Box 5003

N-1432 Ås Norway

Tel.: +47 64 96 52 00 Fax: +47 64 96 52 01

Internet: http://www.umb.no/noragric

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BETWEEN A ROCK AND A HARD PLACE:

Pressures reducing NGO managers’ ability to analyze the effects of their organizations’ financial transactions

By Geir Øye

The Norwegian University of Life Sciences Master Thesis

Department of International Environment and Development Studies, Noragric

Spring 2013

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Declaration

I, Geir Øye, declare that this thesis is a result of my own research investigations and findings.

Sources of information other than my own have been acknowledged and a reference list has been appended. This work has not been previously submitted to any other university for award of any type of academic degree.

Signature………

Date………

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Acknowledgements

There are many people I am indebted to after having gone through the sometimes painful process of finishing this thesis.

First and foremost, I would like to thank my supervisor from UMB, professor Nadarajah Shanmugaratnam. His wisdom, vast knowledge and patient guidance kept me on track from the stage of formulating the proposal and up until submitting the final thesis. I also want to thank associate professor Darley Kjosavik for giving inputs and advice, especially during my stay in South Sudan. As both she and professor Shanmugaratnam did a study in South Sudan, I was lucky enough to have them both as discussion partners during parts of my field study in Juba

I also want to thank all the NGO-staff in South Sudan who took the time to sit down with me and let me tap into their knowledge, experiences and interesting views. I am deeply impressed by the level of dedication and hard work that I know you put in every day, under conditions that

sometimes can be very harsh indeed.

Also, I want to thank my family in Norway, as well as my extended family in Japan and Jordan, for always supporting and encouraging me along this long journey. Special thanks go to my wife, Miki. Without your loving support, patience and encouragement, this would have never been possible.

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Abstract

The purpose of this research has been to study factors, both internal/organizational as well as external, that can reduce NGO managers’ ability to critically analyze the effects their organizations’ financial transactions can have in the contexts where they are operating.

Literature suggests that an awareness of the political economy in the local settings is crucial to avoid potentially negative effects of the influx of resources that aid represents. Resources are prone to be exploited and when aid and resources is distributed in a careless manner, it can have detrimental effects.

This study found that internal factors such as low, relevant experience of expatriate managers, high turnover and insufficient introduction programs within the studied NGOs, were factors reducing the managers’ ability to analyze the effects their organizations’

financial transactions had in the local context. Further, the study also found that there was an inherent conflict between the operational programs and administrative support units, a conflict that led to conflicts and tension on a regular basis. The pressures to deliver within the organizations, led to situations where the organizations’ rules and regulations, as well as the requirements laid down in contracts with donors, were broken on a regular basis. This would typically happen by bypassing procurement regulations and also window dressing, an activity involving production of documentation that would give the appearance that proper procedures had been followed.

External pressure from donors was also found to reduce the analytic capacities of the NGOs.

The study found that increasingly excessive reporting requirements would skew attention away from the NGOs’ obligation towards their beneficiaries. The increased focus on anti- corruption measure was also found to have unintended consequences. The study found that the way the donors’ “Zero-tolerance” policy was operationalized, actually gave strong disincentives against NGOs to detect and report corruption. Ironically, the study also found that despite the increasing administrative demands put on the NGO’s, the donors’ willingness to fund administrative functions was decreasing.

The thesis concludes that the finding of internal pressures as well as the pressures from the donors, actually reduced the ability of the managers of NGOs to analyze the effects of their financial transactions.

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Abbreviations

CBO Community based organization

CD Country Director

CPA Comprehensive Peace Agreement

CPI Corruption Perception Index

CSO Civil Society Organization

FM Finance Manager

HR Human Resources

LM Logistic Manager

MFA Ministry of Foreign Affairs

NGO Non-Governmental Organization

NORAD Norway`s Agency for International Development PCPB Post-conflict Peace building

SPLA Sudan People`s Liberation Army SPLM Sudan People`s Liberation Movement

TI Transparency International

UN United Nations

UNDP United Nations Development Program UNICEF United Nations Children’s Fund

UNODC United Nations Convention Against Corruption

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1. Introduction

1.1 Background

Norwegian NGOs often operate in countries perceived to be highly affected by corruption.

Despite putting efforts into minimizing the risk of embezzlement of funds and other types of corruption, most NGOs will at some point experience attempts from actors that seek to tap into their resources in ways inconsistent with the intentions and values of the NGOs, their donors and not least, the beneficiaries. In recent years, the issue of corruption has been given increasing attention worldwide. In Norway the issue gets much coverage in the media. It is debated extensively within the aid community as well as in general, public debates. Naturally, it is also a great concern for the large Norwegian donors such as NORAD and the Norwegian Ministry of Foreign Affairs.

The realization that aid can come with unintended and negative consequences has grown strong since Mary B. Anderson wrote her highly influential book “Do no Harm” in 1999. Aid can distort local markets and it can reinforce or disrupt local power-structures. The influx of resources that aid represents can, if provided in a careless manner and without a proper analysis of the local setting, threaten to prolong ongoing conflicts or undermine a nascent peace arrangement. (Anderson, 1999) Scholars on political economy such as Philippe Le Billon, underlines the importance of relief agencies and NGO`s to have a “greater economic awareness” and to “develop a better understanding of the political economy of war”. (Le Billon, 2000) (p. 23).

Although several humanitarian actors claim neutrality and impartiality, aid can seldom or never be apolitical and neutral. Aid, in whatever form it comes, represents resources, resources that need to be carefully distributed so as to not create unintended consequences.

Bertram Spector warns that through lack of careful monitoring, planning and executions, the rapid influx of development funds in a post-conflict setting can create a situation where,

“corruption can be unintentionally institutionalized into peacebuilding and reconstruction initiatives”. (Spector, 2011) (p.9).

Despite the rich literature on the importance of relief agencies and NGO`s to analyze the context in which they are operating, there is surprisingly little to find on how NGO`s should

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go about acquiring this capacity and even less on how they are supposed to get financing for it. According to Le Billon, there are several obstacles that deter NGO`s from acquiring a better understanding of the political economy in the context where they are operating. Such factors can be lack of information, lack of time to do analysis, prioritization, staff turnover, expertise and focus. (Le Billon, 2000) (p.23).

1.2 Problem statement

Non-governmental organizations (NGOs), have received criticism and accusations for

enhancing the occurrence of corruption, and thereby indirectly causing greater inequality and growing grievances in post-conflict settings. (Shearer, 2000) (p.189)

The Government of Sudan and the Sudan People`s Liberation Movement (SPLM) signed a Comprehensive Peace Agreement (CPA) on the 9^th of January 2005. (USDOS, 2011). After this, there has been a regular “invasion” of NGOs establishing themselves in the South Sudan, and the new capital, Juba has undergone an enormous transition. There are now huge numbers of small and large NGOs alongside new embassies and UN agencies.

Several scholars have underlined the potential negative effects such “invasions” can have in the local context. In similar settings where the international community has put their focus and resources, critics have claimed the influx of foreign organizations can come with some very unwanted consequences. Pouligny (2005) for example, claim that these organizations are

“occupying space no longer available to local actors, thereby having a detrimental effect on local economies through increase in salaries, store prices and house rents, which impede local organizations from functioning properly”. (Pouligny, 2005) (p.501)

Many would agree that several of the effects Pouligny mentions above, are visible in the present situation in South Sudan today. NGOs are significant economic actors in South Sudan. The management of these NGOs takes several decisions involving large sums involving contracts, procurements and other financial transactions that the top management¹ does locally and with a high degree of autonomy. I have tried to shed light on which factors

1 Program managers, Country Directors, Finance and Logistic Managers

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the management of the NGO`s themselves perceive to be important in hindering their ability to critically analyze the effects of their financial transactions.

Against the backdrop described in the section above, the objective of this thesis is to study the factors that can hinder NGOs in gaining a deeper understanding of context in which they are operating, and reduce their ability to avoid unintended consequences of their financial transactions.

In order to do this, I have conducted interviews with top managers as well as managers of administrative support functions such as logistics and finance in three large Norwegian NGOs who operate in South Sudan. Taking inspiration from the framework provided by Le Billon (2000), and based on the appreciation that the `deterring factors` may be of an internal (organizational) as well as of an external nature, I have chosen to study factors within the NGOs` organizations as well as factors stemming from one group of particularly powerful external stakeholders, namely the donors.

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1.3 Research objectives and research questions Research objective

To study different internal and external factors that may influence the ability of the management in Norwegian NGO`s to carefully analyze the effects that their financial transactions may have in the local context where the organizations are operating.

Such factors can be internal/organizational factors such as the organizations’ level of staff turnover, time constraints, local knowledge and contextual/cultural understanding, recruitment policies as well as internal pressures to deliver.

In addition pressures stemming from a particularly powerful group of external stakeholders, namely the donors, will be studied. Examples of such factors or pressures could be reluctance to fund administrative support functions, excessive reporting requirements, counterproductive policies, lack of coordination between donors and so on.

Research question 1:

How do internal/organizational factors affect the possibility of NGO managements’

ability to properly analyze the effects of their financial transactions?

Research question 2:

 How do donor requirements/demands affect the NGO management`s ability to properly analyze the effects of their financial transactions?

1.4 Outline of the thesis

In this first chapter, I am introducing the topic of the thesis and presenting the focus of the study as well as its research objective and research questions.

Chapter 2 will present the theoretical and conceptual framework which this study draws from.

The chapter starts with a brief review of political economy approaches, and puts the role of the NGOs into a broader context, a role that has been expanded significantly post 9/11. Since this thesis also seeks to study organizational processes and factors that can affect NGO

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managers’ ability to analyze the effects of their financial transactions, some concepts from organizational theory are also discussed.

Chapter 3 is dedicated to presenting the methods used in this thesis. It starts with a description and rationale behind the choice of research design and study location. Next, the methods for sampling, data collection and analysis will be elaborated. Finally in this chapter, I will describe some of the challenges encountered as well as ethical considerations that guided the process.

Chapter 4 is the presentation of the findings from this study. After a brief introduction, the findings are outlined around the same structure as given by the research objective. In the 5th and last chapter, I draw up conclusions from the thesis and present the findings I deem most important.

1.5 Limitations of the study

This study examines findings and practices from only three Norwegian NGOs in South Sudan. In addition to this limitation, the respondents were intentionally picked from senior management positions first and foremost within the administrative support units. With these limitations, it has never been an intention to seek to draw any generalization from the findings in this study. As will be mentioned in section 3.1, such an attempt would have been flawed.

At the same time, I do however believe that managers of NGOs in complex settings will often encounter the same challenges and dilemmas as has been explored in my study. My hope is therefore that the findings and recommendations may have significance for organizations and their managers who operate in similar settings in countries recovering from conflict and war.

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2. Theoretical Framework

2.1 Recent debates on development and security – the big picture After 9/11, a growing focus has been given on what has been dubbed the Security-

Development Nexus. Scholars such as Duffield (2007) claims that development has become subject to securitization and that the development agenda has increasingly become

interconnected and merged with the security agendas of Western nations. According to Waever and Buzan”, security is seen as a constructed reality. An issue is framed as a security issue in the process of securitization, a process that gives the issue a high priority, and

demands action from people in a position to do so. (Smith, 2005)

The threat as viewed from the West, is that with increasing globalization a local conflict in a faraway region may potentially destabilize whole regions and eventually bring terrorists to the doorsteps of the West. Mark Duffield (2007) claims that this thinking lies behind a new approach to development, an approach where the donating countries not only sees it as “the moral duty of effective states to protect and better the lives of people living within ineffective ones, but such help also strengthens international security”. (Duffield, 2007) (p.2)

The consequences of this repositioning of development have been dramatic shifts in the way aid has been given, under which arrangements, and by which actors in different complex emergencies around the globe. In Afghanistan for example, humanitarian assistance has sometimes been given by armed soldiers or NGO-staff working closely together with coalition forces. As such, aid has by some been claimed to have become a weapon in the ongoing counter-insurgency with the aim to beat Taliban. This has caused concern for the safety of NGO workers who increasingly have been perceived as collaborating with “the enemy” by the insurgents. (Slim, 2004)

This shift has also come with an increasing eagerness by the international community to intervene in conflict areas using both military force to stop violence, but also with a massive influx of aid in the with the aim of rebuilding the economy as well as institutions deemed necessary to create a sustainable peace. To exemplify this eagerness to intervene, Duffield claims that the number of UN peacekeeping operations ”increased from four in 1990 to fifteen in 2002” (Duffield, 2007) (p.26)

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2.2 Post-conflict Peace building (PCPB)

In addition to the growing numbers of interventions, the interventions have also come with a significantly higher ambition than earlier. The aim is no longer merely to monitor ceasefires, but to build a sustainable peace. The main ingredients in this endeavor are; to establish security and reintegrate former combatants to society, introduce democracy (elections), the rule of law and the respect for human rights. At the same time, the aim is to implement western market models that in turn will (hopefully) pave the way for economic development.

Needless to say, working with such a ‘Terms of Reference’ in societies ravaged by decades of war, can be a daunting exercise. Scholars such as Jung (2003), Keen (2008) and Duffield (2007) have criticized the way the Western nations are going about pursuing this ambitious endeavor, but also its rationale and theoretical basis

According to Jung (2003), much of the current post-conflict strategies for peace-building is based on Western liberal thoughts. Identifying the roots of these liberal thoughts back to Kant`s theories of Liberal Peace, he reminds the readers that the current, and apparently peaceful coexistence of democratic countries in the West did not come without conflict, and that it took centuries to develop and mature. In addition, he also emphasizes the apparent ease with which current globalized liberal markets can coexist and prosper with regional and local structures of violence. (Jung, 2003) (p. 10).

He therefore warns against using these Western arrangements as “normative blueprints for the institutionalization of peace, welfare and democracy” (Jung, 2003) (p.11) and impose them into contexts that does not have the conditions established for these arrangement to work.

Ending a military conflict has proven to be a task the military machinery of the World powers is capable of doing. Building a society with well-functioning institutions, democracy, a vibrant civil society, the rule of law, a free market, and so on, has however proven to be a much more difficult endeavor.

Peace must mean something more than just the absence of military conflict. A society free of military conflict is of course a very good starting-point, but citing Johan Galtung, David Keen (2008) notes that the label `peace` might actually conceal new forms of violations such as for

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example economic exploitation, exclusion and marginalization of large parts of the

populations by a corrupt elite². This kind of peace is by Galtung termed `negative peace`, and the aim should rather be to reach the stage of `Positive peace`. At this stage there might be conflicts as well, but society will have developed institutions that regulate them. People will be free from the oppression and exploitation that the negative peace would allow to happen.

In addition, a culture of peace would be established. (Keen, 2008) ((p. 171-172).

It is to be expected that in order to reach this stage, a “one-size-fits-all” approach may be inappropriate. Several scholars have emphasized that since each society has its own unique historical, political, economic and cultural peculiarities, a flexible approach must be used.

How one goes about the task of post-conflict peace building needs to take these peculiarities into consideration to ensure that the processes are appropriate for the context where they are put in place. Despite this, Jung argues, the Western liberal “blueprint” described above continues to be the guiding ideology behind “peace-building operations in which a

multiplicity of international and transnational actors have been engaged”(Jung, 2003) (p.11).

2.3 Economic agendas during and after conflict and war

2.3.1 Economic agendas during conflict and war

David Keen has stressed the importance of economic agendas to explain conflicts. In contrast to earlier approaches that judged conflicts and war as tell-tale signs of a collapse of central authority, Keen offers an alternative interpretation; “war may often be best conceptualized not as a contest or a collapse but as a system”. (Keen, 2008) (p.48). Keen emphasizes that for some actors, the continuation of conflict might be the most “rational” prospect, especially when it pays off huge profits for these actors. Berdal and Malone (2000) also underline the financial dimensions of conflict and how it fosters what has been called a war economy:

According to them, economic considerations are often the driving forces behind the calculations and the behavior of warring parties in a conflict. (Berdal and Malone, 2000) (p.2). War economy is by Keen defined as “all the economic activities (legal and illegal) during a war. Profits may arise from pillage, protection money and ransoms, controlling

2 Galtung refers to these forms of violation as `Structural violence`. (Keen, 2008) (p.171-172)

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trade, exploiting labour, gaining access to land and appropriating aid. Salaries and corrupt benefits accruing to military personnel may also be important” (Keen, 2008) (p.26).

2.3.2 Post-conflict economic agendas

In a post-conflict situation, when societies are recovering from war, states are fragile and institutions are weak or barely existing, the war economy may easily transform and seek to find new ways of sustaining the cash flows. According to Le Billon, people in power will see a transition to peace and democratic elections as both a political and economic risk, and will often indulge in corruption as a way to sustain their cash flows and powerbase. (Le Billon, 2003) (p.423)

This view is shared by Scharbatke-Church & Reiling (2009), who has focused their research on the devastating effects corruption can have on the efforts of peace building in post-conflict societies: “In a post-war environment, even where state institutions remain intact, the “fog of war” and its aftermath provides cover for private profiteering from those who should be leading the reconstruction” (Scharbatke-Church and Reiling, 2009) (p.4).

The same authors claim that peace agreements sometimes create winners out of the same actors who during the conflict utilized the conflict as a system to generate profits in corrupt activities such as confiscation of properties and diversion of aid. The losers will be the ordinary citizens, who will suffer the consequences of corruption through loss of rights, exclusion from participation in a functioning economy, loss of property and displacement, etc.

(Scharbatke-Church and Reiling, 2009).

A widely used definition of corruption is the one coined by the organization Transparency International (TI), who defines it as “the abuse of entrusted power for private gain”. (T.I, 2006) (p.1) Further it is usual to classify different degrees or levels of corruption into the categories of grand corruption and petty corruption. The Norwegian research institution U4 defines the division between grand and petty corruption as follows:

“Grand corruption takes place at the policy formulation end of politics. It refers not so much to the amount of money involved as to the level at which it occurs - where policies and rules may be unjustly influenced. The kinds of transactions that attract grand corruption are usually large in scale - and therefore involve more money than bureaucratic or "petty"

corruption.” (U4, 2011) (p.1)

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Le Billon (2003) warns that corruption, if left unchecked in a post-conflict setting, may lead to renewed violence, especially when “orchestrated along social default lines defining the sharp inequalities that fuel both grievances among marginalized groups and greed-driven jockeying within dominant ones”. (Le Billon, 2003) (p.417).

2.4 Post-conflict Peace-building and the role of International NGOs

“Analyzing the manipulation and shortcomings of humanitarian aid is one thing; knowing what to do about it is another” (Keen, 2008)

The literature briefly presented in the previous section, emphasizes that corruption when allowed to fester a post-conflict society may have the potential to destabilize a fragile peace and under certain circumstance have the power to reignite violent conflict. Awareness about corruption as well as developing strategies for how to avoid it to develop and thrive, should therefore become integral parts of programming with all actors involved in PCPB, be it donors, governments, multilateral aid agencies and not least the NGOs and CBOs.

However useful for acquiring an overview of the significant negative influence corruption can have, the literature reviewed so far does however not give much guidance for actors “on the ground”. It has its focus mainly on the donor countries’ motivation for intervention

(Duffield), the Western liberal thought that lie behind the elements of the interventions (Jung

& Keen), as well as for their lack of appreciation of the need to take into consideration the local context before implementing “democracy in a hurry”. (Jung, Keen, Duffield). The level of analysis (and critique) is not much focused on the “sharp end” of the interventions, where projects are carried out, or as Keen puts it; “Analyzing the manipulation and shortcomings of humanitarian aid is one thing; knowing what to do about it is another” (Keen, 2008) (p.141).

One of the most influential contributions that actually does analyze the “micro-level” where policy meets reality, is the book “Do no Harm”, written by Mary B. Anderson in 1999. One of the reasons behind the impact this book continues to have, might very well be that that it was a product of a collaborative effort between practitioners from NGOs, the donor

community as well as different multilateral agencies. In addition, it provides practical examples and is written in a language that does not alienate those outside of the “academic

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elite” who sometimes may end up writing analysis that attracts attention only from other scholars.

One of the main insights Anderson`s book brought to the aid community, was to exemplify how aid, however well intended, could lead to very negative consequences in the local context where it was given. The influx of resources that aid represents can, if provided in a careless manner and without a proper analysis of the local setting, threaten to prolong ongoing conflicts or undermine a nascent peace arrangement. (Anderson, 1999). Aid can distort local markets and it can reinforce or disrupt local power-structures.

Therefore she argues that it is imperative that aid agencies on the ground realize their responsibility for how aid is given. One element is to conduct analysis of the local context and identifies actors and processes that can be obstacles for peace. She also offers practical models of how such analysis can be done, and examples of interventions that have managed to avoid feeding into processes that can reinforce conflict.

Although several humanitarian actors claim neutrality and impartiality, aid can seldom or never be apolitical and neutral. Aid, in whatever form it comes, represents resources, resources that need to be carefully distributed so as to not create unintended consequences.

Bertram Spector warns that through lack of careful monitoring, planning and executions, the rapid influx of development funds in a post-conflict setting can create a situation where,

“corruption can be unintentionally institutionalized into peacebuilding and reconstruction initiatives”. (Spector, 2011) (p.9).

Against the backdrop provided so far in this chapter, corruption should concern practitioners from all disciplines within the aid community, and not only accountants and auditors. The question at stake is not merely whether some staff or cooperating civil society organization has misappropriated funds. Rather, corruption may under certain circumstances, constitute a threat to the very fabric of society, lay to waste to the very efforts of aid agencies and

according to some scholars even fuel grievances strong enough to reignite the conflict. (Le Billon, 2003)

Anderson`s contribution has brought valuable insight which has had significant impact on how NGOs and other actors reflect and seek to design their programs and projects. It does not

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however offer much insight into the “inner workings” of the NGOs as organizations, and how different factors might hamper their ability to actually do the kind of analysis and

programming that she advocates.

Despite the huge attention corruption has received in the last years, and despite the

documented interconnectedness between conflict and corruption, some scholars claim that there is a divide between the different disciplines within the organizations engaged in peace building efforts, such as NGOs. The issue of corruption, it is claimed, is somewhat outside of the scope and focus of “traditional” development agencies who deal with peace building efforts, supporting civil society organizations, and so on. Scharbatke-Church & Reiling (2009) also underline that the division on focus “goes both ways”, since professions who ordinarily deal with corruption seldom sees it as their role to go into the politics of conflict and peace building:

“Despite the frequent intersection of corruption with conflict and peacebuilding, few

peacebuilding agencies have explicitly developed programming aimed at altering the vicious network of corruption. In fact, it is fair to say that many consider corruption, especially in its less sensational forms, a problem for the accountants and lawyers, just as those lawyers consider conflict and politics to be outside of their mandate” (Scharbatke-Church and Reiling, 2009) (p.5).

2.5 Going inside the NGOs

Scholars on political economy such as Philippe Le Billon, underline the importance of relief agencies and NGO`s to have a “greater economic awareness” and to “develop a better understanding of the political economy of war”. (Le Billon, 2000) (p. 23).

Despite the rich literature on the importance of relief agencies and NGO`s to analyze the context in which they are operating, there is surprisingly little to find on how NGO`s should go about acquiring this capacity and even less on how they are supposed to get financing for it. According to Le Billon, there are several obstacles that deter NGO`s from acquiring a better understanding of the political economy in the context where they are operating. Such factors can be lack of information, lack of time or capacity to do necessary analysis, prioritization, staff turnover, expertise and focus. (Le Billon, 2000) (p.23).

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In addition to these obstacles NGO`s, as other organizations, are subject to both internal and external pressures, requirements and demands that often are incompatible. (Oliver, 1991).

Organizations are dependent on legitimacy in order to attract resources and therefore ultimately to survive. Citing Suchman (1995b:574), W. Richard Scott gives the following definition of legitimacy: “Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Scott, 2008) (p.59).

NGOs will typically have numerous stakeholders such as donors, the public back home, other organizations with which they interact, national and local governmental bodies where they operate and last but not the least - the beneficiaries. As noted by Oliver (1991) different pressures and demands may also very well come from within the same organization. An NGO, as other organizations, will have employees representing different professions with their own values, norms and definitions. Typically, an NGO will also consist of employees from different cultures and countries.

As Oliver notes above, the demands and pressures from the different stakeholders are often incompatible, and since relative power of the different stakeholders are asymmetrical this

“often bring organizations up against conflicting demands, where satisfying one group’s demands may come at the expense of another”. (Rauh, 2010) (p. 31).

Karen Rauh (2010) has made use of organizational theory to study how Southern NGOs (SNGO) have used different ways to react to pressure from one particularly powerful stakeholder; the donor. According to Oliver, institutional theory emphasizes the usefulness of conformity to externally imposed criteria in order for the organization to survive. Compliance is viewed as self-serving for the organization’s survival, and it is therefore advisable to adhere to expectations, norms and external rules. (Oliver, 1991) (p.148).

According to Scott (2008), a resource-dependent approach to organizations views legitimacy in itself as a resource like any other that any organization will need in order to continue to exist and survive. While the institutional perspective as such may describe organizations as rather passive, the resource dependence theorists emphasize the organizations need to adapt

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“to environmental uncertainty, coping with the problematic interdependencies, and actively managing or controlling resource flows” (Oliver, 1991) (p.148).

While obtaining legitimacy is central to both perspectives, the resource dependent perspective can be said to treat legitimacy as an instrument to achieve other goals, such as for example funds from a donor. Image and symbols becomes important and several organizational scholars, have described that managers often manipulates symbols “to “manage” their legitimacy in the larger environment” (Scott, 2008) (p.169).

This opens up for a wider view of the options that are available for managers of organizations under pressure to conform to the often conflicting demands and requirements from different stakeholders. Oliver (1991) outlines five types of responses organizations may apply to react on pressures for conformity in the environment they are operating in. The five responses goes from passive to increasingly active; acquiescence, compromise, avoidance, defiance, and manipulation (Oliver, 1991) (p.151).

But as mentioned above, the pressures may also be intense within the organizations itself.

Staff from different disciplines has different views, values, experiences and educational background. Scott (2008) describes how legitimacy is viewed based on which view different parts of an organization have.

A regulatory view, would emphasize conformity to rules, and would “ascertain whether the organization is legally established and whether it is in accord with relevant rules and regulations” (Scott, 2008) (p.61). Maybe not surprisingly, managers of administrative support functions will subscribe to such a regulatory view.

A normative view, on the other hand, “stresses a deeper, moral base for assessing legitimacy”

(ibid). As will be discussed later, the operational managers of the NGOs would typically adhere to such a normative view.

Scott underlines that these views may very well cause conflict and tension, and underline that the normative view may dictate actions that go against the regulatory view:

“Many professionals adhere to normative standards that motivate them to depart from the rule-based requirements of bureaucratic organizations”. (Scott, 2008) (p.61).

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3. Methodology

In this chapter I will describe the design and process of the research conducted for my thesis.

In the first section, I will outline the background for the choices taken in regards to research design and choice and choice of study location. I will then move on to the methods chosen for sampling, data-collection and analysis. In the last section I will reflect on some of the challenges encountered during the study as well on some of the ethical considerations that has been guiding the process.

3.1 Location of study and research design

3.1.1 Research design

Yin (1989) defines research design as “the logic that links the data to be collected (and the conclusions to be drawn) to the initial questions of the study” (Yin, 1989) (p.27). Sumner and Tribe (2008) highlight that the researcher`s ontological and epistemological position will inform the choice of theoretical frameworks and choice of methodology. The aim is a research design that gives a coherent structure from the objectives of the study and the choice of methodology. (Sumner and Tribe, 2008)

3.1.1.1 Case Study

According to Yin (1989) a case study is highly relevant when A) The form of research question is in the form of “how, why” and B) the studied events does not require (or allow) them to be controlled and C) the focus is on contemporary events. Yin also underlines that a case study allows “an investigation to retain the holistic and meaningful characteristics of real-time events” and mentions specifically organizational and managerial processes. (Yin, 1989) (p.14).

My study has been focused on processes within primarily the supporting units of Norwegian NGOs. Central has been to get the respondents views and interpretations on how external as well as internal, organizational pressures may affect the NGOs` ability to analyze the effect of their financial transactions. Bryman (2004) notes that the term `case study` is commonly used as describing a study which is focused on a specific location or in a particular setting such as an organization. (Bryman, 2004) (p.49). He also points out that even though case studies are

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most commonly associated with qualitative methods, this might not be the case. Case studies can both be solely based on either quantitative or qualitative methods or a combination of these (ibid).

Thus, a case study is not a methodology choice as such, but more a choice of what will be the focus of the study. Here the cases studied were from three Norwegian NGOs working in South Sudan which had their national head offices in Juba, Central Equatoria state.

According to Yin (1989) one can therefore say that the primary unit of analysis is the three organizations studied, while the case itself relates to the processes of to how these units conduct their financial transactions, and how different external and internal, organizational pressures affects the organizations ability to analyze the effects of these transaction. (Yin, 1989) (p.31). According to Bryman (2004) my case may be viewed as an exemplifying case, where my units of analysis (the NGOs) are chosen “not because they are extreme or unusual in some way but because they will provide a suitable context for certain research questions to be answered” (Bryman, 2004) (p.50).

Based on my own experience from working as a top manager for supporting departments in large NGOs, one assumption underlying of this study is my belief that the multitude of pressures, both internal and external, put on top managers on NGOs sometimes undercut the organizations` capacity to critically analyze the consequences of their financial transactions.

The result can sometimes be unintended outcomes that in worst case can be contradictory to the expressed goals and policies of those organizations.

3.1.2 Location of the study

The reason for choosing Juba, South Sudan as the location for the study was based on several factors. South Sudan is a highly prioritized recipient country for Norwegian humanitarian donations and hence several large Norwegian NGOs are present with large operations. Most of these organizations have since the signing of the 2005 CPA chosen to have their national head offices in Juba.

Since my study has targeted the top management, and in particular top management of supporting departments, Juba was therefore the natural location to get easy access to the relevant respondents. Another important factor for me was that I have myself worked in South

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Sudan for two large Norwegian NGO`s. This background was very useful for me as I already knew the area, I had interest and some knowledge of the recent history and events and I knew many of the organizations operating in South Sudan. In addition I also had an extensive network of persons working in central positions in different international organizations in Juba.

Since this is a case study, and done in a specific time and in a specific context, it has of course never been a goal to make any attempt of making any generalizations from the study. Any such attempt would have been flawed since it cannot be done. As Bryman (2004) notes:

“..case study researchers do not delude themselves that it is possible to identify typical cases that can be used to represent a certain class of objects….In other words, they do not think that a case study is a sample of one” (Bryman, 2004) (p.51). While appreciating this fully, I do however believe that the findings may have significance in similar settings where NGOs are working in a complex environment in a country recovering from conflict and war.

3.2 Methods

3.2.1 Sampling

Sampling refers here to the selection of individuals to take part in interviews for the study (Bryman, 2004) (p.83). The sampling done for this study can according to Bryman (2004) be termed as purposive, meaning that the researcher “samples on the basis of wanting to

interview people who are relevant to the research questions” (Bryman, 2004) (p.334). The aim is according to Bryman to establish “a good correspondence between research questions and sampling” (Bryman, 2004) (p.333). Since my objectives and research questions relates directly to top the managers as well as the managers of supporting departments of the three Norwegian NGOs to be studied, this actually dictated the selection of interviewees from the offset.

Long before going to South Sudan, I had contacted some heads of Norwegian NGO`s and explained about my research, and as I left for South Sudan I already had some interviews booked

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Due to annual leave and meetings outside of the country, I was unable to interview one of the three the top managers in the organizations studied. I did however manage to interview the top managers for the relevant supporting units in all three NGO`s.

I did also utilize snowball sampling to a small degree. During interviews, I was informed about certain staff that had particular tasks and/or knowledge that was interesting for me to look further into. I then contacted them and conducted interviews that are included in this study. These respondents did not actually “fit the description” of the target group of the study since they were not formally part of the top management teams of the organizations where they were employed. Because of their long experience and deep knowledge into the topics concerned, they did however enjoy large degrees of authority and autonomy in the

organizations and did through this have significant influence on top management decisions.

Some of them were for example on regular basis called in to participate in top management meetings to present specific cases. Some of them were also taking parts in high level meetings outside of the organizations as well as in high-value negotiations with suppliers and donors.

In addition to this, snowball sampling also led me to several informants outside of the organizations. These were also contacted and interviewed, but on specific topics and in a more informal way than the ones sampled from the three Norwegian NGOs.

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3.2.2 Data collection

3.2.2.1 Semi-structured interviews

Interviews are commonly used as a method for data collection within social sciences.

According to Bryman (2004), interviews are often aimed at get to know the respondents “own behavior or that of others, attitudes, norms, beliefs, and values” (Bryman, 2004) (p.109).

One class of interviews is the semi-structured interview. Semi-structured interviews are used when the researcher has a series of questions (interview guide/interview schedule) in a general form, but where the sequence of questions can be varied. Also, it opens up for further

questions based on answers from respondents during the interview. (Bryman, 2004) (p.113).

This flexibility gives the interviewer the possibility to go deeper into interesting issues that comes up during the interview. The general progress of the interview will however follow the interview guide and “by and large, all of the questions will be asked and a similar wording will be used from interviewee to interviewee”. (Bryman, 2004) (p.321). In my study the semi- structured interview was the main method of data collection.

I had prepared an interview guide at the time I delivered my research proposal. Emphasis was put on trying to let the questions “flow naturally” around the objectives and research

questions. Before departure to South Sudan I did however make some adjustments to the interview guide and discussed this with my supervisor both before departure as well as during the field visit in South Sudan.³

3.2.2.2 Unstructured interviews

In addition to semi-structured interview, I also conducted several unstructured interviews. As the term implies, the unstructured interview usually does not follow a set guide of questions, and can sometimes be as limited as one topic the interviewer lets the respondent talk freely about. It is also typically conducted in an informal way, more like a conversation. (Bryman, 2004) (p.321).

The candidates for the unstructured interviews conducted in my study came mostly from snowball sampling. During interviews I would sometimes be informed about individuals who had specific roles or knowledge that I was interested in. For example, it led me to individuals

3 I had the advantage of having my supervisor in Juba, South Sudan for about 14 days since he was participating in research there.

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external to the NGOs studied, such as for example local leaders in the Bari community in Juba.

In addition, I also did unstructured interviews on an ad-hoc basis when the opportunity offered itself. An example of this was during the weekly gatherings of Scandinavian expatiate staff at the Norwegian ambassador`s residence. Unlike when conducting semi-structured interviews, I did not utilize my recorder during any of the unstructured interviews. I did however always carry with me a notebook and wrote down the main points during or after the conversations and made more elaborate notes when coming back to my room.

3.2.2.3 Reviewing documents

Documents can be an important source of data. As my study relates to aspects around how NGOs conduct financial transactions such as procurements and contracts, I got access to all the three NGOs` financial and logistic handbooks and guidelines long time in advance of my departure for South Sudan. Bryman (2004) writes that getting access to company archives and policy documents, strategies, files, can be “very important for researchers conducting case studies of organizations using methods such as participant observation or..qualitative interviews” (Bryman, 2004) (p.387).

The financial and logistical handbooks and guidelines provided me with the normative descriptions of how the organizations in their policies have regulated how financial transactions such as procurements and contracts should be conducted in the field.

Since I was on leave from one of the organizations studied during my field study, I also had the advantage of getting access to the archives and files of this organization during my stay in South Sudan. This gave me insights into how some actual contracts had come into being in site. Combining this information with the policies made centrally in Norway as well as with information from the semi-structured interviews, sometimes gave invaluable and also surprising insight.

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3.3 Data analysis

The analysis of the data collected actually started already while still conducting interviews in the field. I made notes of interesting findings and checked against literature and my research objectives and my research proposal. Some findings were also discussed with my supervisor who spent approximately 14 days in South Sudan on a research mission. The bulk of the analysis did however start in earnest after returning to Norway, and as I will discuss in the next chapter it proved to be a rather daunting task.

Before I went to South Sudan, I had purchased a digital recorder that came together with what proved to be an extremely useful computer program for storing, cataloging and transcribing the interviews. With the exception of the unstructured interviews, all interviews were

recorded. At the end of the day I would download the interviews to my computer. I also made regular back-ups on an external hard-drive I had brought with me from Norway. In addition I made my own notes regarding special points and findings from the interviews

One very useful function of the digital recorder was that the interview could be “cut” into parts which became separate files that could later be renamed and cataloged. By this function, I was able to later make a database in Excel where I for each respondent had organized the answers following the structure of my research objectives and research questions. In the cells of this database I made hyperlinks to the stored audio-files for each answer of the respective respondents. This undoubtedly saved me much time since I could retrieve the data quickly and directly by simply clicking the hyperlink in my database.

Since all my respondents spoke either English or Norwegian, I did the transcribing myself.

Here the computer software supplied with the digital recorder also came in handy. It had a function that slowed down the playback speed to one where I could easily write down exactly what the respondents had said.

3.4 Ethical challenges and considerations

Ethical considerations were given the highest priority for this study. In my case, the issue of confidentiality for the respondents was of high importance and at the same time a challenge.

Many of the responses given to me during the interviews have the potential of setting both organizations and individuals in a less than flattering light. It was therefore imperative for me

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to ensure the respondents that utmost care would be taken to ensure their confidentiality. The inability to fulfill the respondents wish for confidentiality, could be viewed as a breach of the criteria of not causing harm to participants. (Bryman, 2004) (p.509).

The Norwegian NGO community is not that large, and since I myself at the time I did the field study had been working for two of the three NGOs studied, and since there is a high possibility that some of the respondent will at some point later become colleagues, I considered this to be a challenge. Since I was primarily focusing on the top managers of supporting units in the three NGO`s studied, I could see that there could be the possibility that a reader very well acquainted with the local organization of the NGOs in Juba could be able to deduct from whom some of the responses came from. To avoid this I have sometimes

avoided mentioning the sex of the respondent and instead used gender-neutral terms such as

`this manager`, etc. Some interviewees also had titles unique for a specific NGO. In these cases, I also used similar terms to conceal the identity of the respondent.

Another issue highlighted by Bryman (2004) is the issue of informed consent. With this is meant that as a principle all respondents should be given “as much information as might be needed to make an informed decision about whether or not they wish to participate in the study” (Bryman, 2004) (p.511). All the respondents were informed about the lay-out and intentions of my study and gave their consent to participate. Before conducting the interviews I also underlined that the respondents were free to skip any of the questions should they feel uncomfortable with answering them. As mentioned in above, all the semi-structured

interviews were recorded. This happened openly and only after the respondent had agreed to it.

3.5 Challenges

When comparing my experience from the field work with stories from some of my co-

students, I can see that I have been quite privileged. Having worked in South Sudan myself, I had several advantages that saved me much time. I already had contacts and a “starting-point”

well before my departure. I had already booked some interviews, I had a safe and comfortable place to stay and access to transportation. I knew the locations of the offices of the NGOs to be studied as well as the location of the Norwegian embassy, local hangouts for Norwegian

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expatriate personnel, etc. These things enabled me to be productive from the very day I arrived in Juba.

Some of the same factors that gave me the abovementioned advantages were however the same factors that gave me concerns regarding data-collection. As was discussed above, the Norwegian NGO community is not that large. Since I have myself worked in central positions for two of the NGOs to be studied, I had some concerns regarding whether or not I was “too close” to the organizations and issues/topics of relevance to this thesis. I discussed this also with my supervisors and others.

Based on the same affiliation with two of the NGOs studied, I was also concerned and

prepared for the possibility that some of the respondents would be unwilling to be interviewed by me. This did fortunately not happen. On the contrary, my experience was that the

respondents were very eager to share information. Some were very interested indeed in the topics and gave open, lengthy and detailed answers that proved very valuable. Despite my initial concerns, it may have been that some felt comfortable to talk openly to an interviewer that had himself actually been in the same setting and held similar positions as the respondent.

I had deliberately avoided going to South Sudan too close up to July 9^th, which was the day South Sudan celebrated their first day as an independent country. I knew that the euphoria and the large presence of delegates from all over the world would make it practically impossible to move around, to find accommodation and to get appointments for interviews.

Despite having taken this precaution and arriving in Juba almost one month after the

celebrations, I quite often had interviewees asking for an appointment to be postponed. The security situation along the border to Sudan was very fluid and deteriorating during my entire stay in Juba. Since many projects administered by the studied NGOs were based in these contested areas, there were several incidents that required the urgent attention of especially logistic managers and country directors. Due to these incidents, I actually had to change my air tickets and prolong my stay by almost two weeks.

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4. Under pressure from all sides: Findings from three Norwegian NGOs operating in South Sudan.

The three sections of this chapter will present the findings of this study, and will explore factors that may hinder the ability of management of administrative support functions to carefully analyze the effects their financial transactions may have in the context in which they are operating. Section 4.1 and 4.2 will focus on internal (or organizational) factors, while section 4.3 will focus on external impeding factors.

Each of the sections will be rounded off with a discussion-part drawing on the theoretical and conceptual frameworks as presented in chapter 2.

4.1 Local knowledge, turnover and introduction given to expatriate staff

“When the expats finally start to get an overview, then they quit.”⁴

This section will start out with a brief description of the previous experience of the

interviewed administrative managers, and also describe the form and level of introductory programs within their respective organizations prior to deployment to the new mission in South Sudan. Lastly, it will describe the level of turnover in these positions.

Scholars such as Le Billon (2000) and Anderson (1999) have underlined the necessity for aid organizations to invest considerable time in understanding the context they are operating in, to enable them to analyze the effects of their financial transactions and avoid negative impacts of their efforts. Normally, managers within administrative support functions have a

financial/administrative background. Depending on their previous experience in settings similar to South Sudan, it would therefore probably be natural to offer them a broad and thorough introductory program with a large focus on the local context, including history, issues of ethnicity, socio-economic issues, levels and types of corruption in the society, etc.

According to Le Billon (2000), lack of information and staff time for training in these issues can be an obstacle hindering the organizations` ability of gaining the necessary understanding of the context where they operate. (Le Billon, 2000) (p.23)

4 Interview nr.8

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In any organization, be it in Europe or anywhere else, a manager is normally not expected to be “fully operational” from the day he or she has started in a new position. Depending on previous experience, he or she will use considerable time to get to know new colleagues, standard operational procedures and requirements of the job, the culture of the new company, etc. In addition to the above, a new manager in an NGO operating in a complex setting as South Sudan, will have to accept a host of new challenges which may considerably prolong the time needed to get an overview over both the functions of the new organization and the local context. Such challenges may for example be issues of personal security, harsh working conditions, poor infrastructure, limited recreational facilities, long lead-times for replacement of any needed items, language barriers, large cultural differences, etc.

The rationale for discovering patterns of turnover and the introduction given to expatriate staff is based on the assumption that this will have implications on the level of local knowledge⁵ it is possible to gain for the managers. This again may affect their ability to analyze the effects the organizations` financial transactions may have in the local context and avoid unwanted consequences. Le Billon (2000) specifically mentions high staff turnover as one obstacle for gaining a deeper understanding of the local setting.

Ideally, an NGO operating in a complex and fluid setting as South Sudan, should have a stable pool of highly experienced managers. The level of turnover of senior staff should be kept at a level where the organization`s management (both expatriate and local) has a solid understanding of the cultural, economic and political setting and is able to administer and keep that institutional memory.

Through interviews in the three NGOs studied, it became evident that the situation was quite different from the “ideal” picture sketched above.

4.1.1 Experience and local knowledge amongst expatriate staff in administrative support functions

All the Finance managers (FM) interviewed were expatriate staff. Two were Norwegians, and one was from a Non-Western Country. For all three of them, this was their first assignment abroad. The two Norwegian FMs had no previous experience from the field of development

5 Local knowledge will in this context cover, historical/political background, local market conditions, ownership conditions, levels of corruption, etc.

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at all. The Non-Western expatriate had previously worked within financial management for the same Norwegian NGO in his own country of origin.

All three of the Finance managers had higher education within finance and administration.

They did however express that they had no prior knowledge of the local setting before applying for the positions they now held.

Only two of the three NGOs studied had an expatriate manager within the field of Logistics and procurement. One was from a West-European country outside of Scandinavia, while the other organization had an expat from a neighboring country in the region. The third NGO did not have an expatriate Logistic manager, and based their logistical department on local human resources only.

The European LM had several years of experience from a variety of international NGOs in complex operations in Africa and elsewhere. The second expatriate LM also had several years of experience, of which the last two years was from South Sudan.

4.1.2 Introduction and briefing prior to deployment

“Nobody had told me that there were no ATM machines here”⁶

As described above, the previous experience of the FMs and LMs were quite different in the three Norwegian NGOs studied. Given the fact that none of the FMs had any previous work experience outside their own country, and since they had no experience from working with a development NGO, one would expect to see that proper introduction programs were offered before sending them off to their mission in South Sudan. The finding did however reveal that this was far from the case.

One Finance Manager (who came from a non-Western country) was sent directly to South Sudan from the country of origin without any introduction to the local context whatsoever.

The introduction in Juba was given to him by colleagues when “they had the time”. ⁷ Apart from this, there was no formal introduction to the peculiarities of operating in South Sudan.

6 Interview nr.3

7 Interview nr.4

Between a rock and a hard place : pressures reducing NGO managers' ability to analyze the effects of their organizations' financial transactions

BETWEEN A ROCK AND A HARD PLACE:

Pressures reducing NGO managers' ability to analyze the effects of their organizations' financial transactions

Geir Øye

BETWEEN A ROCK AND A HARD PLACE:

Pressures reducing NGO managers’ ability to analyze the effects of their organizations’ financial transactions

By Geir Øye

The Norwegian University of Life Sciences Master Thesis

Department of International Environment and Development Studies, Noragric

Spring 2013

Declaration

Abstract

Table of Contents

1. Introduction

2. Theoretical Framework

3. Methodology

4. Under pressure from all sides: Findings from three Norwegian NGOs operating in South Sudan.